More than half of Canadians aged between 25 and 30 — or 57 percent — believe that they will be able to eventually afford a home, according to a survey carried out by one of Canada’s largest real estate companies, Royal LePage.
In fact, a remarkable 87 percent of Canadians aged 25 to 30 believe homeownership is a good investment, which sheds some light on the millennial preference to own, rather than rent, regardless of whether they can afford it.
Royal LePage’s “Peak Millennial Survey” polled 1000 Canadians aged between 25 and 30 — the largest cohort of millennials in Canada — to find out where they stand on buying versus renting, and how they plan to afford to purchase a home.
Approximately 50 percent of those polled said they are currently renting, and 35 percent already own homes. A sizeable 14 percent of Canadians in the 25 to 30 age bracket continue to live with their parents until they can afford to move out either to rent, or to buy a home.
It’s worth noting that 58 percent of respondents had a household income of less than $69,000, and only 34 percent said they are on track to have a sufficient down payment of over 20 percent to qualify for a mortgage in the price range of $350,000.
These numbers however, vary substantially according to province. In Ontario, 59 percent of peak millennials say they would like to buy a detached home, but only 30 percent believe they will be able to afford one. The average price of a single-detached home in the Greater Toronto Area now stands at about $1.2 million, a decrease from the April 2017 peak of $1.5 million.
“To many peak millennials, entering the real estate market as quickly as possible is no longer just a good idea, it’s a must,” said Tom Storey, a sales representative at Royal LePage in Toronto. “After witnessing significant home price appreciation occur for months, if not years, their perspective is that they must enter the market in the immediate-term to avoid being completely shut out, missing the opportunity to move up the property ladder as they’ve seen so many do.”
The survey also broke down home affordability rates across the country — with a budget of $350,000 prospective buyers in the Greater Toronto Area could only get a 910 square feet condominium on average. The situation was similar in Greater Vancouver; a $350,000 budget would only land you a small two-bedroom condominium at best. In Saskatoon, Regina and Winnipeg however, $350,000 was more the enough for a spacious three or four bedroom home of up to 1700 square foot in living space.
While many millennials would love to own homes, the reality is that prices are out of reach for most, especially in urban centres. It’s even become unaffordable to buy a tiny one-bedroom condominium as a means of getting one’s foot into the real estate door.
The average price of a Greater Vancouver condo in July 2017 was $664,944, 16 percent higher than a year earlier. In the Greater Toronto Area, the average price of a condo was just over $500,000, higher than July 2016, but slightly lower than a few months ago.
Home prices across the Greater Toronto Area have rapidly declined over the last four months, catalysed by the province’s decision to impose a 15 percent tax on home purchases made by foreign nationals. But that drop in prices of roughly eight percent is nowhere near enough to boost affordability in Canada’s largest city.
Overall, peak millennial purchasers fare best in Quebec, Atlantic Canada and the Prairies, according to Royal LePage.
“Of the regions studied, Fredericton, New Brunswick offered prospective homeowners the most value for their money, producing a 2,568 square foot, four-bedroom home for $350,000 on average.”